More Evidence that Women Leaders Add Value

On the occasion of International Women’s Day, International Monetary Fund chief Christine Lagarde argues for policy strategies to bring more women into Europe’s workforce, pointing to a new IMF staff study that touches on some of the benefits of including women, particularly in corporate leadership:

Bringing more women into the labor force benefits a country’s economy in two important ways:

  • First, more women in the labor force will expand labor supply. If women choose to participate in the labor market as much as men do, Europe’s workforce could increase by 6 percent. If they also choose to work as many hours as men, the workforce could grow by as much as 15 percent.
  • Second, the prevalence of full-time female employment is a strong predictor of the share of senior corporate positions held by women. And more women in senior managerial positions and in corporate boardrooms, the IMF staff study confirms, is associated with stronger firm financial performance, which would help support corporate investment and productivity, further mitigating the slowdown in potential growth in Europe.

The positive relationship between more women high on the corporate ladder and firms’ profitability is more pronounced, the study finds, in sectors where women form a larger share of the labor force—highlighting the importance of bridging gender gaps between senior executives and the general workforce. This positive association is also more evident in knowledge-intensive services and high-tech manufacturing sectors—where diversity, including gender diversity, can help meet the high demand for creativity and innovative capacity.

Jared Lindzon at Fortune flags another study showing that organizations with more women in the C-suite tend to enjoy “a significantly stronger reputation and more competitiveness in the job market”:

That’s according to a study published today by public relations firm Weber Shandwick. Using data from the Fortune 500 and World’s Most Admired Companies rankings, the firm found that companies with the best reputations in their respective industries have more than twice as many women in senior management as those with weaker reputations.

Being among the most admired comes with a number of benefits, explains Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick.

“We are really convinced that reputations are a company’s most competitive asset,” she says. “They make huge tangible and intangible differences.” Those benefits can include recruiting and retention, employee engagement and even profitability.

A new Korn Ferry Hay Group study may provide some insight into the origins of that competitive edge. Their research finds that “women score higher than men on nearly all emotional intelligence competencies, except emotional self-control, where no gender differences are observed”:

In fact, when assessing the competency levels of both men and women across the 12 key areas of emotional and social intelligence, Hay Group research found:

  • The greatest difference between men and women can be seen in emotional self-awareness, where women are 86% more likely than men to be seen as using the competency consistently (18.4% of women demonstrate the competency consistently compared to just 9.9% of men).
  • Women are 45% more likely than men to be seen as demonstrating empathy consistently.
  • The smallest margin of difference is seen in positive outlook. When it comes to this emotional intelligence competency, women are only 9% more likely to exhibit the competency consistently than men.
  • Other competencies in which women outperform men are coaching & mentoring, influence, inspirational leadership, conflict management, organizational awareness, adaptability, teamwork and achievement orientation.

Meanwhile, Rob Moss at Personnel Today discusses yet another study looking at the value of women on boards of directors:

Economists from the Technical University of Munich (TUM) and the University of Hong Kong studied the share price fluctuations of companies following the exit of top managers due to death or illness.

The researchers looked at around 3,000 cases in 51 countries where no gender quota requirements were in place between 1998 and 2010. The study shows that share prices fell by 2% on average following the sudden departure of a woman director. In cases where a woman was replaced by a man, there was a bigger drop of 3%. However, when the departing board member was a man, the share price remained steady. …

The research suggested that shareholders do not value women more highly per se, but instead judge the actual performance of the board.

These studies all jibe with previous research connecting the presence of women in leadership roles—whether in the C-suite or on the board—to profitability and good governance. Our own Women in Leadership study (which CEB members can read in full) offers some tips for how your organization can take advantage of these benefits and share in the profits of a more equitable workplace.